First of all, this is my first post, so hello to all!
I wanted to say how excited I am to happen across v4 of dydx recently - I have been keeping a close watch on the decentralised perpetuals space for a while, and I think moving to a full orderbook model is absolutely the right move: better liquidity, tighter spreads, etc. I truely believe that a fully decentralised derivitives exchange will be a game changer, especially as tradfi governement enforement agencies around the world continue to tighten their grip in a desparate attempt to save their doomed fiat currencies.
However, I do have some concerns still in this area:
The (only?) trading front end at dydx.trade makes the system vunerable to takedown, and censorship. For example, if you try to visit dydx.trade from Zimabwe, you get this msg:
IP/Country Block
Because you appear to be a resident of, or trading from, a jurisdiction that violates our terms of use, or have engaged in activity that violates our terms of use, you have been blocked. You may withdraw your funds from the protocol at any time.
Validators are not very annonymous. Each one is a potential target for a government order, as that is where is ‘exchange’ is hosted
for your first point, the front itself is managed by dYdX and must follow regulatory rules. I don’t know what the rules are in Zimbabwe, but it’s possible that perps trading is not “allowed”.
However, you can run your own front end or execute trading orders directly with scripts connected to an RPC. The frontend code is open and you can find sample scripts on github.
Your second point concerns validators.
Most of us are registered companies. We can indeed be questioned by our own government about our activities on the blockchains we validate.
The blockchain operates on a BFT consensus, which means you need 66% of the voting rights under your control to force anything to run on the blockchain.
With current validator voting power, this means you need to take control of a minimum of 8 validators.
The main centralization problem comes from the top1 validator, ExMachina => 26% of voting power.
This validator can practically stop the chain on its own if the total of offline votes reaches a total of 33%.
It is the duty of token holders to take care of decentralization by not delegating their tokens only to the top rank.
This is a permissionless network and anyone can manage a validation node and be part of the active set if delegations are sufficient, even government-funded validators.
This is the antithesis of decentralisation, though. What advantage really is there if dydx is forced to follow the same rules as Binance?
But I wonder how many validators would refuse to cooperate with a government? And after the first one is taken down, how keen would new candidates be to put themselves at such risk?
IMO, the front end needs to be totally decentralised - it ought to be relatively easy to box it up and serve it from localhost through an .exe, I’m not sure why this isn’t the default?
Also, I would suggest that it might be wise for future validators to be annonymous, otherwise how will the chain survive governmental scrutiny?